Why India Offers ‘An Extraordinary Opportunity for Spanish Investors’

by Dave

Some good insights that can be used by LatAm investors and biz executives as well.
Knowledge@Wharton

In an
interview with Universia-Knowledge@Wharton, Jyoti Gupta, professor of
finance at the ESCP-EAP business school in Europe and former dean of
the Asian Institute of Technology, analyzes India’s business ties with Spain and Latin America, focusing on the legislative efforts India has made to provide a maximum level of security for foreign investors.

UK@W: What image do Indian companies have of Spanish companies?

J.G.: They have a very positive view. There have never been any political problems between India and Spain. In addition, India feels culturally close to Spain, through its art, literature and architecture. Many Indian students go to Spain, and they like Spanish fashions, as I explained earlier. As a result, Indian entrepreneurs show no reluctance to accept the arrival of Spanish companies or reach commercial agreements with them.

UK@W: How do Spanish executives think about the way companies function in India?

J.G.: Generally speaking, I believe they have a positive view, especially after those companies are already here [in India] although Spanish executives clearly are apprehensive about the enormous lack of infrastructure that exists in India for developing their businesses. They also can’t count on having a sufficient number of qualified personnel.

UK@W: Could you provide some practical advice for Spanish executives who want to do business in India?

J.G.: The best advice I can give Spanish executives is to keep an open mind when they decide to move into India. Unlike countries such as China and Japan, doing business in India is not “ceremonial.” The formalities that prevail at a business meeting in China, where people distribute business cards according to a specific system of rules, do not exist in India. The fundamental factor is the close, informal character of meetings. For example, it is not common to wear neck ties. The Indo-European culture is very well entrenched so the differences are minimal. Nevertheless, doing business in India requires you have a flexible concept of time, and not to reveal any sense of urgency.

Finally, it should be stressed that the success of any agreement between India and Spain is not based on a formal legal document but on personal relationships that reflect a friendship and confidence that all parties believe in. For that reason, it is very common for a deal to be closed, not in a restaurant, but in the home of the Indian executive, and in the presence of his wife and children. You should not be surprised to receive an invitation to have dinner with his family in a private home. On the contrary, this is a sign of being on the right road to closing a commercial agreement. You have to accept such an invitation immediately, and show your appreciation.

UK@W: Culturally speaking, what are the main differences and similarities between India and Spain? In what ways is it possible to have a greater number of misunderstandings that might make commercial relationships more difficult?

J.G.: As I explained earlier, one difference is the way doing business involves informality and closeness. In Spain, executives will close a commercial agreement over lunch at a good restaurant but never in their own home and with their children. Personal relationships are something left on the sidelines; in India, they are the key. When it comes to similarities, we are much closer culturally than we believe, especially if we compare ourselves with a Communist country like China.

In India, as anywhere else, respecting the culture of the country is a complicated thing, and it can lead to frictions. India is an enormously free and open country. Clearly, it has many traditions, but its peoples are not so traditional. The communications, media and business worlds have no reluctance to openly criticize politics, religion or other aspects of the country. They are also not offended if a Spanish executive openly exposes his fears or those aspects that he likes least about India. Criticism is viewed as something particularly normal and common in a democratic society.

UK@W: Can you comment on the relationship between Indian companies and Latin American companies?

J.G.: The relationship is good. We have no political problems with these countries, so we are targeting them for investments. India already has a presence in Brazil and Mexico. Like India, Brazil is an emerging country and we have a lot of business interests there. However, trade relations are still not very strong.

UK@W: Looking at the future, do you believe that it will be the Indian companies that make acquisitions in Latin America, or the Latin Americans who move into India?

J.G.: The case of ArcelorMittal (the world’s largest steelmaker) provides a good example of how Indian companies can wind up surprising us. India is especially interested in buying Latin American companies because of their potential in Spanish-speaking markets. Our interests are focused, above all, on the service sector, heavy industry (steel), pharmaceuticals (generic drugs), and software companies. The future will surely provide us with major surprises from India.

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